Jason Chen's sloppy iPhone breakdown damaged the prototype and may have added vandalism to the list of pending charges against him and other Gizmodo staffers. (Source: Gawker Assets)

Vandalism and sale of trade secrets are two of the top charges that may be leveled against Gizmodo's staff

Gizmodo/Gawker
employees Brian
Lam and Jason
Chen are embroiled in a mess over the fourth generation
iPhone that they purchased and then tore apart. Lam and Chen
contend that the iPhone was merely lost and that they are innocent.
Apple, however reported the phone stolen.

Documents concerning
the case and the search
of Chen's house have been released in the form of an
affidavit pertaining to the search of Chen's home. The
damning summary of the case comes on page 12, which reads:

Suspect
Brian Hogan found or stole a prototype iPhone 4G that was
accidentally left at a restaurant by Apple employee Robert "Gray"
Powell. Hogan identified the owner of the phone as Apple Engineer
Gray Powell through the contents of the phone and through Internet
searches. Rather than return the prototype phone to Powell and/or
Apple, Hogan subsequently sold the iPhone Jason Chen in Fremont for
$5000. Upon receiving the stolen property, Chen disassembled the
iPhone, thereby causing it to be damaged. Chen created copies of the
iPhone prototype in the form of digital images and video, which were
subsequently published on the Internet based magazine Gizmodo.com.

It's
will be mighty hard for Gizmodo to dispute that,
except perhaps for the phone's status being stolen. However,
Apple had reported the lost phone prototype stolen
before Gizmodo found it.

Gizmodo's
writers appear to have not been truthful about at least one
significant detail of the incident. In their coverage they
claimed they bought the prototype for $5,000. According to
multiple accounts the real total was close to $10,000.
Detective Matthew Broad describes in the affidavit an interview with
Katherine Martinson, roommate of Brian Hogan, the man who found and
sold the phone:

Martinson
said Hogan later showed her a camera box that contained $5000.00 in
$100 US Treasury Notes. Hogan told her that the money was a result of
selling the phone to Jason Chen. Martinson said Hogan told her he
has received a total of $8500.00 the sale of the
phone, but she is not sure of the source of the additional $2500.00.
Martinson said Hogan also told her that he will receive a cash bonus
from Gizmodo.com in July if and when Apple makes an official product
announcement regarding the new iPhone.

(Note:
There seem to be some discrepancies in Detective Broad's numbers, he
probably meant $5,000 and $7,500; not $5,000 and $8,500. The
take home message, though, appears to be that Gizmodo paid more than
the $5,000 they claimed.)

The affidavit also reveals:

Martinson
said she and other friends attempted to talk Hogan out of selling the
iPhone prototype on the basis that the sale would ruin the career of
Robert "Gray" Powell (Apple engineer who lost the
phone). Hogan's response to her was that it, "Sucks for
him. He lost his phone. Shouldn't have lost his phone."

It
also reveals that Hogan had an accomplice -- his roommate Thomas
Warner. Warner, who has a misdemeanor history, helped Hogan try
to destroy evidence of the phone. States the report:

Based
upon the fact that Warner directly assisted Hogan with the removal
and concealment of evidence directly related to this case, I believe
it is highly likely that Warner was involved and or conspired with
Hogan in the negotiation and subsequent sale of the prototype iPhone
and that his efforts to conceal and or destroy the evidence
as an indication of his consciousness of guilt. I also know that
cellular devices like BlackBerries and iPhones function as small
computing devices and that they maintain large quantities of data
which include, but are not limited to call logs, email
communications, system logs, GPS logs, text messages, applications,
and Internet browsing history. Additionally, based upon my training
and experience, I know that continued use of the devices can result
in the deletion of data and or potential evidence on the phone.
Therefore, I seized the items as evidence.

Unfortunately,
Warner and Hogan's attempts to hide or destroy the evidence were
largely for naught, as the pair apparently had a change of heart and
directed police to the evidence they had ditched. The ditched
items include stickers that identify the phone as an Apple prototype,
a camera memory card, a USB memory stick, and a computer.

The
affidavit also contains part of the email exchange between Brian Lam
and Steve Jobs, in which Lam demands a letter of authenticity for the
phone's safe return. Jobs complied with the demand, according
to the affidavit.

The affidavit indicates that Chen and/or
others at Gizmodo will
likely be charged with receiving stolen property, vandalizing private
property, and sale of trade secrets. Even if they can escape
the claim that they bought stolen property, they will be particularly
hard pressed to fight the vandalism charge, as it is obvious they
damaged the expensive prototype.

The seller Hogan may be
charged with felony theft and or sale of trade secrets as well.
And his friend Warner may be charged as an accomplice to these
actions They may find it hard to prove their innocence, given
the fact that they tried to destroy evidence of their actions.

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Did the person/company who owned the device report it stolen or lost? Not for 3 days. That, under certain legal statutes, is considered abandonment. It was left in a bar and the guy who left it there didn't own it.

quote: Did he know who it belonged to? Yes.

This might be a valid legal point IF the phone had not been abandoned.

quote: Did he make money off selling someone else's property? Yes.

This also might be a valid legal point IF the phone had not been abandoned.

Now do I think they needed to use better judgment? Sure. Does that bad judgment qualify as criminal behavior? Certainly not. People lose phones everyday. And while it sucks, it's life. A friend lost her iphone, twice. Once it was returned. The second time it was not. As it turns out the second time, the person who found it had called AT&T and reported it found and then held onto it. It took more than a month for them to contact my friend and let her know, by which time she had replaced it. She called the guy and thanked him for trying being honest and told him to keep it. Not everyone is that honest or can be. A few years ago, I found a Creative Zen mp3 player on the sidewalk with no one around to claim it. Local statutes for my city is to report anything of value over certain dollar amount. When I called the police to report it they literally told me it was not worth the effort and to keep it. Under those circumstances, it is legally abandoned, as was my friend's iphone.

There is a very serious difference between lost/abandoned and stolen. The folks at Gizmodo didn't use the greatest of thinking power when they made the choice to buy the phone, but no crime was committed.

I think your argument about what abandonment is fallacious. Abandonment, in whatever jurisdiction or context you're talking about, has a lot to do with the mental state of the person doing the abandoning. If he did not intend to leave it out of his control, its not abandonment.

Not filing a police report may help you argue that abandonment occurred, but there is no way that its enough by itself. Lots of people lose things and dont report those items stolen. Those objects are not abandoned. That fact, alone, will make a simple lack of reporting insufficient to show abandonment and, therefore, not really a good argument for you to make here.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA